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I’m feeling the risk-off vibes these days, and what better pair to trade than AUD/JPY? I seem to have missed a really nice entry opportunity, but there may be a chance to catch some bearish momentum here.

Short AUD/JPY Idea

I had my eye on this neat range setup for quite some time now, patiently waiting for a test of the top around the 84.00-84.50 area. However, the pair just seems to have completed a quick touch of this resistance zone where plenty of sellers were waiting to jump in.

With that, AUD/JPY is making its way below the middle of the range to confirm that bearish momentum is present. I gotta admit, it’s really tempting to just jump in and catch the drop until the range support around 81.00.

AUD/JPY 4-hour Forex Chart
AUD/JPY 4-hour Forex Chart

But as I’ve learned in my performance reviews, momentum plays aren’t really my cup of tea so I’d probably be better off waiting for a better entry level and a higher R:R. Stochastic is already indicating oversold conditions anyway.

It’s still a little early in the week also, and a lot could happen that might push AUD/JPY a bit higher again. Commodities have been off to a rough start as the U.S. and China have been trading jabs, but any improvements in the situation could force a pullback from the ongoing slide.

I’m staying bullish on the yen, though, as there have been talks of the BOJ finally gearing up to unwind their massive stimulus program. On top of that, Trump’s fickleness continues to be a source of hesitation to pile on dollar longs even with risk-off flows in play.

Ideally, I’m hoping to be able to catch another test of the 84.50 range resistance so I can short at a good price, but I’m also open to hopping on a small pullback to the short-term area of interest at 83.00. I plan on setting my stop just past the 85.00 mark and aiming for the 81.00 handle as my target.

What do you guys think?


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